manager of Salem Data Services, that Salem Data be closed down or sold. He thought that the opportunity to have this subsidiary seemed too good to give up easily. Flores questioned whether the accounting reports truly painted a clear picture of the contribution that Salem Data Services was making to Salem Telephone. In other situations he had reviewed in the past, he felt that the procedure used in accounting for separate activities in the company tended to obscure the costs and benefits they provided
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JET2 - Financial Analysis - Task 4 JET2 – Task 4 A1. Costing Method Costing is used in business accounting strategies as a way of determining cost of manufacturing a product in relation to the revenue generated by that product. Costing systems determine the overhead of production and then allocate those overhead costs to a business’s product. There are two common methods for allocating these indirect costs to products, traditional costing and activity based costing. Both of these methods
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leverage at both 20,000 and 25,000 bags e. what is the degree of combined leverage at both sales levels. A. What is the break even point in bags. The break even point in bags will equal the fixed cost divided by the unit contribution margin, which the unit contribution margin will equal the selling price per unit subtracted by the variable cost per unit. Therefore my equation is $10-(50*0.10) will equal 10-5 which equal $5. So, the break even point will equal the operation fixed cost which is 80
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Case Study II: A. Break-even point in passengers and revenues per month = 35,000; $5,600,000 1) Per Passenger Sales $160 Variable Expenses 70 Unit Contribution Margin $90 Fixed expenses ÷ Unit CM = $3,150,000 ÷ 90 = 35,000 passengers in break-even point 2) Contribution Margin Ratio (CM Ratio) = Contribution Margin ÷ Selling Price = $90 ÷ $160 = .5625 Break-even point in dollars = Fixed costs ÷ CM Ratio = $3,150,000 ÷ .5625 = $5,600,000 B. Break-even point in number
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$10,500.00 $0.07 Contribution margin $15,000.00 $0.10 Less: fixed expenses $12,000.00 Net income $3,000.00 Special & standard order mix Special order - 25,000 brochures Selling price $10.00 per 100 brochures $0.10 per brochure Selling units 25,000 Variable expenses per unit $0.06 (Less $1 for per 100 brochures for SR) Total Per Unit Revenue $2,500.00 $0.10 Less : Variable expenses $1,500.00 $0.06 Contribution margin $1,000.00 $0.04
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Jorge Felix MBA, Management and Strategy Student ID: 000309831 Mentor: Rose Sklar C 915-497-5423 El Paso, Texas MST Financial Analysis RJET Task 4 To: Mr. Vice President From: Jorge Felix, CBI Analyst RE: Summary report As directed by you, please read below my analysis and recommendations for Competition Bikes Inc. Since the company has retooled and is making both the Carbon Lite and the Titanium frame bikes. I will be analyzing the results of your directed activity-based costing analysis was
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the alternative that will achieve growth targets and meet payment obligations. Financial Assessment Livoria Sandwiches has a good underlying business model and financial performance in 2012 except for the litigation charge (See Appendix 4). Contribution margin % was 53% compared to the industry’s 45%. This means Livoria’s costs of labour and materials as a percentage of sales are lower than the industry. As well, sales grew by 5% versus industry growth of 1% meaning that Livoria has taken market share
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6 Cost-Volume-Profit Relationships True/False 1. To estimate what the profit will be at various levels of activity, a manager can simply take the number of units to be sold over the break-even point and multiply that number by the unit contribution margin. Level: Medium LO: 1 Ans: T 2. Incremental analysis is generally the simplest and most direct approach to decision making. Level: Easy LO: 1 Ans: T 3. To facilitate decision-making, fixed expenses should be expressed on a
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Current Profit: $ 2500 New Price per additional unit: 0 New Contribution Margin = New Price per unit – Variable cost per unit =$8.5-$2.5 =$6 New Sales unit @40% additional sales= 5000*40%= 2000 Additional profit @40% additional Sales = Additional Sales* New Contribution Margin =2000*6 =$12000 New Sales unit @20% additional sales= 5000*20%= 1000 Additional profit @20% additional Sales = Additional Sales* New Contribution Margin =1000*6 =$6000 Steady: Sales: 5000 Price per unit: $10 Variable
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000 Contribution Margin = the total sales – the total variable cost = $290,000 Contribution Margin Ratio = Contribution Margin / Total Sales = $290,000 / $720,000 = 0.4028 The break-even point in total sales dollars = Fixed expenses / Contribution Margin Ratio = $282,000 / 0.4028 = $700,099 So the company’s overall break-even in total sales dollars is $700,099. Question 2a: What is the break-even quantity of each product? Break-even quantity = Fixed Expense / Contribution Margin
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